The Swedish oatmilk maker cites foreign currency headwinds in Europe, ongoing pandemic restrictions in Asia and production challenges in the Americas as hindering revenues
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Oatly said it is taking ‘decisive and strategic actions’ to improve its operational efficiencies | Photo credit: Leon Seibert
Oatly has cited trading restrictions and production challenges as adversely impacting sales during its third quarter, but added the challenges would be ‘transitory’.
Reporting on the three months ended 30 September 2022, Oatly achieved revenue growth of 7% to reach $183m. Oatly CEO Toni Petersson said the results were ‘below our expectations’.
Sales fell 6% in Europe, the Middle East and Africa from $87m to $82.5m, which Oatly attributed to a significant foreign currency exchange headwind of $14.5m in Europe. The EMEA remains Oatly’s largest market, accounting for over 45% of sales.
Revenues increased 23% and 16% respectively in the Americas and Asia, primarily due to higher production output.
However, Covid-19 restrictions in the latter market, including the zero-Covid policy in China, were cited as a major contributor to lower than projected sales growth for the company.
“Third quarter financial results were below our expectations, largely driven by Covid-19 restrictions in Asia, production challenges in the Americas, and continued foreign exchange headwinds. However, we continue to see strong velocities, year-over-year sales volume growth, and minimal price elasticity globally which we believe demonstrates the power and resilience of the brand,” said Petersson.
Oatly also said it is taking ‘decisive and strategic actions’ to improve its operational efficiencies and better ‘position Oatly for its next phase of growth’.
As such, Oatly is seeking to adapt its supply chain network strategy, including pursuing manufacturing partners to create a more hybrid production and handing Global president Jean-Christophe Flatin with oversight of the company’s global supply chain network.
“These initial actions will simplify our organisational structures and the execution of our supply chain network expansion, and we expect more profitable growth going forward with a more asset-light strategy," Petersson added.
Oatly has again lowered its full-year revenue expectations to $720m, having reduced forecasts from $880m to $830m in August 2022. The company said the figure would still represent an increase of approximately 10% compared to full-year 2021.